Correlation Between AKITA Drilling and Lion One
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Lion One at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AKITA Drilling and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Lion One Metals, you can compare the effects of market volatilities on AKITA Drilling and Lion One and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AKITA Drilling with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Lion One.
Diversification Opportunities for AKITA Drilling and Lion One
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AKITA and Lion is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and AKITA Drilling is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AKITA Drilling are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Lion One go up and down completely randomly.
Pair Corralation between AKITA Drilling and Lion One
Assuming the 90 days trading horizon AKITA Drilling is expected to generate 0.52 times more return on investment than Lion One. However, AKITA Drilling is 1.93 times less risky than Lion One. It trades about 0.01 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.22 per unit of risk. If you would invest 160.00 in AKITA Drilling on August 30, 2024 and sell it today you would earn a total of 0.00 from holding AKITA Drilling or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Lion One Metals
Performance |
| Timeline |
| AKITA Drilling |
| Lion One Metals |
AKITA Drilling and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Lion One
The main advantage of trading using opposite AKITA Drilling and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Lion One can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lion One will offset losses from the drop in Lion One's long position.| AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services | AKITA Drilling vs. Western Energy Services |
| Lion One vs. Arizona Sonoran Copper | Lion One vs. Filo Mining Corp | Lion One vs. Marimaca Copper Corp | Lion One vs. iShares Canadian HYBrid |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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